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CONSULTING AGREEMENT
THIS AGREEMENT is made as of this 1st day of August, 1996;
B E T W E E N :
TLC THE LASER CENTER INC., a corporation incorporated under the laws
of the Province of Ontario
(the "Corporation")
OF THE FIRST PART,
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KELMAR CORPORATION, a corporation incorporated under the laws of the
Province of Ontario
("KELMAR")
OF THE SECOND PART.
RECITALS:
A. The Corporation is the parent company of a group of companies
(collectively, the "TLC Group") involved in the business of providing
excimer laser surgery and other secondary eye care services.
B. KELMAR has under contract for his services, Ronald J. Kelly.
C. The Corporation and KELMAR wish to enter into this Agreement to set forth
the basis upon which KELMAR will make the services of Ronald J. Kelly
available to the Corporation.
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS CONTAINED
IN THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION (THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED), THE CORPORATION AND KELMAR AGREE
AS FOLLOWS:
1. Definitions
In this Agreement,
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"Agreement" means this Agreement and all schedules attached to this agreement,
in each case as they may be amended or supplemented from time to time;
"Business Day" means any day, other than Saturday, Sunday or any statutory
holiday in the Province of Ontario;
"Competitive Business" means a business carried on anywhere in North America
which includes the financing, development and/or operation of laser eye surgery
clinics or secondary eye care clinics in the market areas where the Corporation
carries on, or to the knowledge of KELMAR at any time during the term of this
Agreement or any renewals thereof, intends to carry on its business;
"Confidential Information" means all confidential information or proprietary
information, Intellectual Property (including trade secrets) and confidential
facts relating to the business or affairs of the Corporation or the TLC Group
whether or not originated by Ronald J. Kelly including, without limitation, work
products resulting from or related to work or projects performed or to be
performed by the Corporation or the TLC Group, internal personnel and financial
information of the Corporation or the TLC Group, purchasing and internal cost
information, service and operational manuals, the manner and method of
conducting the business of the Corporation or the TLC Group, marketing and
development plans and agreements, price and cost data, price and fee amounts,
pricing and billing policies, quoting procedures, marketing techniques, methods
of obtaining business, forecasts and forecast assumptions and volumes, future
plans and potential strategies of the Corporation or the TLC Group which have
been or are being discussed, ideas concerning proposed eye surgery clinics,
contracts and their contents, patient and affiliated doctor services, data
provided by patients and affiliated doctor services, and the type, quantity and
specifications of products and services, purchased, leased, licensed, engaged,
employed or received by the Corporation or the TLC Group or by clients of the
Corporation or the TLC Group, business plans, patients, affiliated doctor and
vendor lists, business deals with any of these, financing, acquisition,
development, licensing and distribution agreements and budgets and investment
opportunities and structures;
"Contract Term" means the Term and renewals thereof;
"Contract Year" means any 12 month period commencing on January 1, and ending on
December 31 but shall be deemed to include the three month period from October
1, 1996 to December 31, 1996;
"Disability" means the mental or physical state of Ronald J. Kelly such that
Ronald J. Kelly has been unable as a result of illness, disease, mental or
physical disability or similar cause, as determined by a legally qualified
medical practitioner selected by the Corporation, to fulfil KELMAR'S obligations
under this Agreement either for any consecutive 60 day period or for any period
of 60 days (whether or not consecutive) in any consecutive 365 day period;
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"Intellectual Property" means all legally recognized rights which result or
derive from Ronald J. Kelly's services provided to the Corporation or the TLC
Group or with the knowledge, use or incorporation of Confidential Information,
and includes but is not limited to developments, inventions, designs, works of
authorship, improvements and ideas, whether or not patentable or copyrightable,
conceived or made by Ronald J. Kelly (individually or in collaboration with
others) during the Contract Term or which result from or derive from the
Corporation's or the TLC Group's resources or which are reasonably related to
the business of the Corporation or the TLC Group other than any of the foregoing
in respect of which KELMAR provides written notice thereof to the Corporation
prior to any material work being undertaken by Ronald J. Kelly, KELMAR requests
that all such rights which my result or derive from such work be excluded from
the definition of "Intellectual Property" and the Chief Executive Officer of the
Corporation provides written notice to KELMAR of its agreement with such
request;
"Person" means any individual, partnership, limited partnership, joint venture,
syndicate, sole proprietorship, company or corporation with or without share
capital, unincorporated association, trust, trustee, executor, administrator or
other legal personal representative, regulatory body or agency, government or
governmental agency, authority or entity however designated or constituted;
"Term" has the meaning set out in Section 3; and
"Termination Event" means:
(i) the failure of KELMAR, through Ronald J. Kelly to carry out its
obligations hereunder after notice by the Corporation of the failure
to do so and an opportunity for KELMAR to correct the same within a
reasonable time from the date of receipt of such notice;
(ii) theft, fraud, dishonesty or misconduct by KELMAR or its employees
involving the property, business or affairs of the Corporation or
the carrying out of KELMAR'S obligations; or
(iii) any material breach by KELMAR of any term of this Agreement.
2. Scope of Services
The Corporation hereby retains KELMAR:
(i) to provide consulting services to the Corporation in the capacity of
a senior executive officer and general counsel, which shall include
advising the Corporation on mergers, acquisitions, financings and
other professional matters relating to establishing and conducting
laser eye surgery clinics in North America; and
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(ii) to provide such further advice and assistance to the Corporation in
connection with its laser eye surgery clinics as the Corporation may
reasonably request from time to time.
KELMAR hereby acknowledges that the services to be rendered by it hereunder will
be provided to the TLC Group as a whole as well as the Corporation.
3. Contract Period
The term of this Agreement will commence on October 1, 1996 (or such earlier
time as may be agreed upon between KELMAR and the Corporation) for a term of
three and one-quarter years ending on December 31, 1999 (the "Term").
Thereafter, the Term shall be automatically extended for successive periods of
one year unless either party gives notice of termination within 60 days before
or after the applicable renewal date.
4. Performance of Duties
During the Contract Term, KELMAR shall cause Ronald J. Kelly to faithfully,
honestly and diligently provide the services herein contracted for to the
Corporation and the TLC Group as are designated by the Chief Executive Officer
or the Board of Directors of the Corporation to a maximum of 48 weeks per
Contract Year. KELMAR will cause Ronald J. Kelly (except in the case of illness
or accident) to devote sufficient time and effort to the services herein
contracted for so as to use his best efforts to promote the interests of the
Corporation, provided however, the Corporation acknowledges that its provision
of services through Ronald J. Kelly shall be that he will substantially spend
his work week providing services to the Corporation, and the balance pursuing
other interests such as the private practice of law. KELMAR appreciates that the
services herein contracted for involve significant travel, and agrees to cause
Ronald J. Kelly to travel as reasonably required in order to fulfil KELMAR'S
obligations hereunder.
5. Fees
(a) Basic Remuneration. The Corporation will pay KELMAR for the services
of Ronald J. Kelly hereunder an annual contract fee (the "Fee")
throughout each year of the Term in an amount equal to $200,000.00
(Cdn.) plus any applicable Goods and Services Tax. KELMAR
acknowledges that Ronald J. Kelly is under contract with KELMAR and
KELMAR shall be solely responsible for deduction for any applicable
income taxes and other required deductions, such as Canada Pension
Plan and Unemployment Insurance contributions payable by or in
respect of Ronald J. Kelly pursuant to his arrangements with KELMAR
and hereby indemnifies and saves the Corporation harmless in respect
thereof. Unless otherwise agreed in writing, the Fee will be payable
in equal instalments monthly in advance in each month during each
Contract Year, the first payment to be made on October 1, 1996.
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(b) Bonus and Share Options. During any Contract Year in which KELMAR
makes Ronald J. Kelly available to provide services to the
Corporation, Ronald J. Kelly will be entitled to participate in any
applicable fund, plan or arrangement relating to a senior management
executive of the Corporation in effect generally from time to time
with respect to the Corporation, in accordance with and subject to
the terms thereof, including, without limitation;
(i) such bonus remuneration, if any, in respect of each Contract
Year during the Contract Term (including, without limitation,
any Contract Year during which this Agreement terminates), as
the board of directors or Chief Executive Officer of the
Corporation, in their sole discretion, may authorize: and
(ii) share options in accordance with the Corporation's Share
Option Plan, if any, in respect of each Contract Year during
the Contract Term.
Ronald J. Kelly shall be considered a senior executive equivalent to
the Chief Financial Officer and Chief Operating Officer for the
purposes of this Section 5(b). KELMAR hereby acknowledges and
consents to Ronald J. Kelly receiving any bonus or share options
directly in order to facilitate any tax, estate or R.R.S.P. planning
in recognition of the non-transferability of options pursuant to the
Corporation's Share Option Plan.
6. Expenses
The Corporation will, upon presentation of expense statements or receipts and
such other supporting documentation as the Corporation may reasonably require,
pay or reimburse KELMAR in accordance with the Corporation's expense policies
for all travel and out-of-pocket expenses reasonably incurred or paid by KELMAR
in the performance by Ronald J. Kelly of the services herein contracted for,
provided however, Kelmar shall be responsible for any office or secretarial
expenses associated with its office located in London, Ontario.
7. Termination
(a) Notice. This Agreement may be terminated by the Corporation at any
time:
(i) without prior notice and without further obligations to KELMAR
for Disability or if a Termination Event occurs. Termination
of this Agreement by the Corporation pursuant hereto may be
undertaken only under the authority of the Chief Executive
Officer/President.
(ii) upon 90 days prior written notice, provided however that if
this Agreement is so terminated an amount equal to $100,000.00
shall be payable to KELMAR within 30 days following notice of
such termination,
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such payment is acknowledged by the parties to be liquidated
damages and not as a penalty. Each of the parties acknowledges
that the amount of $100,000.00 is a reasonable estimate of the
damages that will occur to KELMAR in the event of termination
of this Agreement pursuant to Section 7(a) shall occur,
particularly due to the previous full time occupation of
Ronald J. Kelly as a private legal practitioner and the time
that will be required for him to establish another full time
practice. Termination of this Agreement by the Corporation
pursuant hereto may be undertaken only under the authority of
the Chief Executive Officer/President.
(b) This Agreement will be automatically terminated, without further
obligation on the part of the Corporation or the TLC Group (except
as to the pro-rata payments of amounts owing to such date) upon the
death of Ronald J. Kelly.
(c) Effective Date. The effective date on which this Agreement will be
deemed to have been terminated will be:
(i) in the case of termination under Section 7(a), 30 days
following delivery of notice of termination; and
(ii) in the case of termination pursuant to Section 7(b), on the
date of death.
(d) No Other Obligations. Except for payment of all amounts owing
hereunder to the effective date of a termination or as otherwise
provided herein, neither KELMAR or Ronald J. Kelly will be entitled
to receive any payment arising out of or relating to this Agreement.
KELMAR on its own behalf and on behalf of its employees hereby
waives any claims against the Corporation for or in respect of
termination pay, severance pay, or on account of loss of office or
employment or notice in lieu thereof or damages in lieu thereof and
KELMAR hereby indemnifies and saves the Corporation harmless in
respect thereof.
(e) Termination by Kelmar. Following the expiration of the Term, this
Agreement may be terminated by KELMAR at any time on 90 days prior
written notice.
8. Return of Materials Upon Termination
Upon termination of this Agreement, KELMAR shall cause its employees to promptly
deliver to the Corporation all property of or belonging to or administered by
the Corporation or the TLC Group, including, without limitation, all documents,
manuals, customer, patient, affiliated doctor, supplier, product and proprietary
lists, data, records, computer programs, codes, materials, prototypes, products,
samples, analyses, reports, marketing materials, equipment,
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tools and devices relating or pertaining to any Intellectual Property or
Confidential Information, including all copies or reproductions of the same.
9. Non-Competition Agreement
KELMAR acknowledges the competitive and proprietary nature of the business
carried on by the Corporation and the TLC Group and the interests of the
Corporation and the TLC Group limiting, on a reasonable basis, the availability
of those primary consultants providing services to Competitive Businesses.
Accordingly, KELMAR agrees that neither it nor any of its employees will, either
during the Term or any renewal thereof or for a period of 24 months thereafter,
directly or indirectly, in any manner whatsoever including, without limitation,
either individually, or in partnership, jointly or in conjunction with any other
Person, or as an employee, principal, agent, consultant, advisor, legal advisor,
director or shareholder
(a) be engaged in any undertaking;
(b) have any financial or other interest (including an interest by way
of royalty or other compensation arrangements) or in respect of the
business of any Person which carries on a business; or
(c) advise, lend money to, guarantee the debts or obligations of or
permit the use of the KELMAR'S name or any part thereof by any
Person which carries on a business;
anywhere in North America, if the undertaking or the business, as the case may
be, is a Competitive Business.
Nothing in this Section 9 will operate to prevent (i) KELMAR or Ronald J. Kelly
from owning, on a passive investment basis, up to 5 % of the issued shares of a
Competitive Business, the shares of which are traded on a recognized stock
exchange or traded in the over-the-counter market in Canada or elsewhere.
Notwithstanding the foregoing, but subject to Section 4 hereof, the Corporation
acknowledges that Ronald J. Kelly will, throughout the Contract Term, continue
to hold certain professional licences relevant to and will continue to receive
compensation from Vision Corporation, other corporations and his private legal
practice and the Corporation agrees that such licenses and relationships shall
not constitute a breach of this Section 9.
10. Non-Solicitation of Employees or Consultants
KELMAR acknowledges the importance to the business carried on by the TLC Group
of the human resources engaged and developed by the TLC Group and the unique
access that
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KELMAR'S employees with the TLC Group offers to interfere with these resources.
Accordingly, KELMAR covenants that neither it nor any of its employees will,
during the Contract Term and for the period of 24 months thereafter, directly or
indirectly, employ, be employed by, enter into a partnership or other
association with or retain as an independent contractor or be retained as an
independent contractor by an employee of or consultant to the Corporation or the
TLC Group or induce or solicit, or attempt to induce, any such person to leave
that person's employment or engagement.
11. Confidentiality
Neither KELMAR nor any of its employees will, during the Contract Term and at
any time thereafter, directly or indirectly, other than as required pursuant
hereto use or disclose to any Person any Confidential Information unless;
(a) the Confidential Information is available to the public or in the
public domain at the time of such disclosure or use, without breach
of this Agreement or any similar agreement between the Corporation
and others; or
(b) disclosure of the Confidential Information is required to be made by
any law, regulation, governmental authority or court, provided that
before disclosure is made, notice of the requirement is provided to
the Corporation is afforded an opportunity to dispute the
requirements for disclosure.
KELMAR and its employees obligations under this Section 12 are to remain in
effect in perpetuity and will exist and continue in full force and effect
notwithstanding any breach or repudiation or any alleged breach or repudiation
of this Agreement by the Corporation.
12. Copyright
During the Contract Term, KELMAR agrees that it and its employees will disclose
to the Corporation all Intellectual Property developed by Ronald J. Kelly,
either or in collaboration with others, which relates directly or indirectly to
the business of the Corporation or the TLC Group. KELMAR acknowledges and agrees
that all right, title and interest of any kind whatsoever in and to the
Intellectual Property, including the foregoing and any copyrights, is and will
be the exclusive property of the Corporation and the Corporation will have
absolute discretion to determine how such Intellectual Property is used. All
work done during the Contract Term by Ronald J. Kelly or KELMAR for the
Corporation or a member of the TLC Group is a work in respect of which the
Corporation or the member of the TLC, as the case may be, shall be deemed to be
the first author for copyright purposes. Copyright will vest in the Corporation
or the relevant member of the TLC Group, as the case may be. KELMAR on its own
behalf and on behalf of Ronald J. Kelly hereby waives all moral rights that
either may have in the Intellectual Property and agrees that this waiver may be
invoked by the Corporation, and by any of its authorized agents or assignees, to
use any of the Intellectual Property. KELMAR agrees that to execute all such
instruments and do all such things as may be reasonably necessary
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or desirable to give full effect to the foregoing and will cooperate and assist
the Corporation and the TLC Group in enforcing their rights under this
paragraph.
13. Certain Warranties, Covenants and Remedies
(a) KELMAR agrees that its obligations as set forth in Sections 8, 9,
10, 11 and 12 will be deemed to have commenced as of the date on
which services are or have been provided by KELMAR to the
Corporation before or after the date hereof.
(b) KELMAR acknowledges that a material breach or threatened material
breach of any of Sections 8, 9, 10, 11 and 12 will result in the
Corporation and it shareholders suffering irreparable harm which is
not capable of being calculated and which cannot be fully or
adequately compensated by the recovery of damages alone.
Accordingly, KELMAR agrees that the Corporation will be entitled to
interim and permanent injunctive relief, specific performance and
other equitable remedies, in addition to any other relief to which
the Corporation may become entitled.
(c) KELMAR'S obligations under each of Sections 8, 9,10, 11 and 12 are
to remain in effect in accordance with their terms and will exist
and continue in full force and effect notwithstanding any breach or
repudiation, or alleged breach or repudiation, of this Agreement by
the Corporation.
(d) KELMAR represents, warrants and covenants that:
(i) it will at all times during this Agreement retain the services
of Ronald J. Kelly; and
(ii) it will not provide the services of any of its employees to a
Competitive Business during the term hereof.
14. Co-Operation
KELMAR will co-operate and will cause Ronald J. Kelly to co-operate in all
respects with the Corporation if a question arises as to whether Ronald J. Kelly
has a Disability. Without limitation, Ronald J. Kelly will authorize his medical
doctor or other health care specialist to discuss any medical condition with the
Corporation and will as reasonably requested by the Corporation submit to
examination by a medical doctor or other health care specialist selected by the
Corporation.
15. Residence
KELMAR represents and warrants that it is not a non-resident of Canada for
purposes of the Income Tax Act (Canada).
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16. Notices
Any notice or other communication required or permitted to be given hereunder
must be in writing, delivered by facsimile or by hand-delivery as hereinafter
provided. Any such notice or other communication, if sent by facsimile, will be
deemed to have been received on the Business Day following the sending, or if
delivered by hand to Ronald J. Kelly will be deemed to have been received at the
time it is delivered to him or, if delivered to Ronald J. Kelly or the
Corporation at the applicable address noted below, when it is delivered to the
individual designated below or to an individual at such address having apparent
authority to accept deliveries on behalf of the addressee. Notice of change of
address will also be governed by this Section. Notices and other communications
must be delivered as follows:
(a) if to KELMAR:
34 Old Mill Court
London, Ontario
N6K 4H6
(b) if to the Corporation
206 Laird Drive
Suite 100
Toronto, Ontario
M4G 3W4
Attention: Chief Executive Officer
Fax No. (416) 467-6882
17. Headings
The inclusion of headings in this Agreement is for convenience of reference only
and its not to affect the construction or interpretation hereof.
18. Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and severable and
a declaration of invalidity or unenforceability of any provision by a court of
competent jurisdiction will not affect the validity or enforceability of any
other provision hereof.
19. Entire Agreement
This Agreement constitutes the entire agreement between the parties pertaining
to the subject matter of this Agreement. This Agreement supersedes and replaces
all prior agreements, if any, written or oral, with respect to the subject
matter hereof. There are no warranties,
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representations or agreements between the parties in connection with the subject
matter of this Agreement except as specifically set forth or referred to in this
Agreement. No reliance is placed on any representations, opinion, advice or
assertion of fact made by the Corporation, the TLC Group or its directors,
officers and agents to KELMAR, except to the extent that the same has been
reduced to writing and included as a term of this Agreement. Accordingly, there
will be no liability, either in tort or inc contract, assessed in relation to
any such representation, opinion, advice or assertion of fact, except to the
extent aforesaid.
20. Waiver, Amendment
Except as expressly provided in this Agreement, no amendment or waiver of this
Agreement will be binding unless executed in writing by the party to be bound
thereby. No waiver of any provision of this agreement will constitute a waiver
of any other provisions nor will any waiver of any provision of this Agreement
constitute a continuing waiver unless otherwise expressly provided. Neither this
Agreement nor any part thereof may be assigned without the prior written consent
of the other party hereto.
21. Governing Law
This Agreement will be governed by and construed in accordance with the laws of
the Province of Ontario.
22. Counterparts
This Agreement may be signed in counterparts. Each counterpart will constitute
an original document and all counterparts, taken together, will constitute one
and the same instrument. Executed counterparts may be delivered by telecopier.
IN WITNESS WHEREOF the parties have executed this Agreement.
KELMAR CORPORATION
Per: /s/ R. J. Kelly
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TLC THE LASER CENTER INC.
Per: /s/ [ILLEGIBLE]
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